TaxTMI 
TaxTMI 
1961 (8) TMI 54
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....ief asked for is to have the order of assessment quashed. The petitioners have not challenged the competency of Parliament to levy gift-tax in respect of properties, movable or immovable, other than agricultural lands. According to the petitioner, in each of these writ petitions, the scheme of the various lists in VII th Schedule of the Constitution will indicate that power to legislate and levy tax regarding agricultural properties and income therefrom is solely and exclusively vested in the State legislatures and that Parliament has no power to levy tax on gifts of agricultural lands. In particular, entry 18 in List II of the VII th Schedule has been very strongly relied upon as giving exclusive jurisdiction to the State legislature over such matters. According to the Revenue, levy of gift-tax on agricultural lands is not provided either in the State List or in the Concurrent List; and, therefore, it falls under the residuary power vested in Parliament under clause (2) of article 248, read with entry 97 in the Union List, and therefore Parliament is competent to enact the legislation in question, even regarding agricultural lands. Before we consider the various contentions tha....
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....erefore other provisions regarding the manner in which the assessments to gift-tax is to be made. There are also officers appointed for the purpose of assessing and levying gift-tax; and there are also provisions for taking up the orders of these officers in appeal. It is not really necessary to consider all these several provisions, excepting to refer to section 13, in Chapter IV to the effect: "Every person who during a previous year has made any taxable gifts shall, before the thirtieth day of June of the corresponding assessment year furnish to the Gift-tax Officer a return in the prescribed form and verified in the prescribed manner. (2) If the Gift-tax Officer is of opinion that in respect of the gifts made by a person during any previous year he is liable to gift-tax under this Act, then notwithstanding anything contained in sub-section (i), he may serve a notice upon such person requiring him to furnish within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner." Sub-section (3) gives power to the Gift-tax Officer to extend the date of submission of the return. ....
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.... Subramania Iyer, learned counsel for the petitioners in O.P. N03. 323 and 1339 of 1959 and his contentions have been adopted and accepted by Sri Mani J. Meenattoor, learned counsel in O.P. No. 117 of i960 and by Sri V.K.K. Menon, learned counsel in O.P. No. 131 of 1961. We will now refer to the entries in Lists I and II, which have also been relied upon by the learned counsel for the petitioners in support of the contention that the scheme of distribution of legislative powers in Lists I and II will clearly show that the power to legislate regarding agricultural lands, which power according to them includes also the power to levy taxation, lie solely within the exclusive province of a State. The particular entries that have been relied upon in List I are entries 82, 86, 87 and 88. Entry 82 refers to "taxes on income other than agricultural income. " Again entry 86 provides for "taxes on the capital value of the assets, exclusive of agricultural land, of individuals and companies; taxes on the capital of companies." Again entry 87 deals with "estate duty in respect of property other than agricultural land." Entry 88 deals with "duties in respect ....
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.... us that levy of a gift-tax can be brought within the powers of the State legislatures on the basis of entries 14, 45, 46, 47 and 48 of List II. But he relied very strongly on entry 18 in List II, as giving the State legislature not only power to legislate over matters mentioned therein, but also to levy tax on "transfer and alienation of agricultural land." In fact, the learned counsel urged that "gift" has been defined in the Gift-tax Act as the transfer of property and that such transfer of agricultural land is taken in and provided in entry 18 and therefore a power to levy a gift-tax on such transfers of agricultural land has been specifically conferred on State legislature. The learned counsel also urged that even a simple power given to State legislature to legislate on the heads mentioned in entry 18 also includes a power to levy a tax on such matters. The question will be whether the counsel for the petitioner is well founded in this contention based upon entry 18. Before we go into the merits regarding the various aspects that have been presented before us by the learned counsel for the petitioner, it is also desirable to state the principles applicab....
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....liament cannot be invoked. Residuary powers under article 248 read with entry 97 of List I can come into play, if at all, only when any matter is not enumerated either in List II or List III. So ran the counsel's argument. The learned counsel also pointed out that the heading is also given in Chapter I, Part XI as "Distribution of Legislative Powers". On this basis, the learned counsel urged that in view of the supremacy of the State legislature under clause (3) of article 246 in respect of matters enumerated in List II, the power to levy any tax in respect of a transfer of agricultural land must be considered to vest only in the State legislature, in view of entry 18 in List II. Mr. Subramania Iyer further urged that article 248 cannot be invoked by the Revenue in the circumstances of this case. According to the learned counsel clause (1) of article 248 must be considered to give exclusive power to Parliament to legislate only in respect of any matter not enumerated in the Concurrent List or State List. It is the further contention of the learned counsel that clause (2) of article 248 gives again exclusive power to Parliament to levy tax only in respect of those ma....
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....ndhra Pradesh 1958] 9 STC 298 (SC).According to Mr. Surianarayana Iyer, the judgment of his Lordship Mr. Justice Venkatarama Iyer, who spoke for the majority of the court in that matter, really concludes these petitions as against the respective petitioners. We will advert to that decision a little later. We are also aware that it is the contention of Mr. Subramania Iyer that the learned judges of the Supreme Court had no occasion to consider the scope and ambit of the residuary power vested in Parliament under article 248(1) or (2) of the Constitution. We may also state that Mr. Surianarayana Iyer referred to the decision of the Andhra Pradesh High Court in Jupudi Sesharatnam v. Gift-tax Officer, Palacole [1960] 38 ITR 93. Where the Andhra Pradesh High Court has upheld the validity of the Gift-tax Act in its applicability to agricultural lands. That decision was rendered by the learned Chief Justice Chandra Reddi and Mr. Justice M.A. Ansari, as he then was. The learned judges after a consideration of the various entries and the scheme of the Constitution, have come to the conclusion that the Gift-tax Act is within the competence of Parliament. Mr. V.K.K. Menon, learned counsel fo....
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....8, taken along with the distribution adopted in the lists, will clearly indicate that the particular scheme of the Constitution itself is to confer powers of legislation in certain matters and also to confer powers for imposing tax in respect of certain matters indicated in the lists themselves. If really the power to legislate on a particular matter takes along with it a power to levy tax, in our view, the provisions of clause (2) of article 248 will be wholly. redundant and unnecessary and no separate entries need be made giving power to levy a tax. It is also interesting to note that in all the three Lists, namely, Union List, State List and Concurrent List, there is a specific entry relating to fees in respect of the matters in the particular list concerned.. For example, see entry 96 in List I, entry 66 in List II and entry 47 in List III. We are only adverting to these matters to show that under the scheme of our Constitution if really the power to legislate carries with it a power of levying tax and also imposing a fee is incidental to the power of legislation, Parliament would not have taken so much trouble to specify or confer the right also to levy tax in respect of cert....
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....ing a tax on such sales. His Lordship Mr. Justice Venkatarama Aiyar, delivering the majority judgment of the court, declined to accept this contention, observing at page 493 as follows: "In List I, entries 1 to 81 mention the several matters over which Parliament has authority to legislate. Entries 82 to 92 enumerate the taxes which could be imposed by a law of Parliament. An examination of these two groups of entries shows that while the main subject of legislation figures in the first group, a tax in relation thereto is separately mentioned in the second. Thus, entry 22 in List I is 'Railways', and entry 89 is 'terminal taxes on goods or passengers, carried by railway, sea, or air; taxes on railway fares and freights.' If entry 22 is to be construed as involving taxes to be imposed, then entry 89 would be superfluous. Entry 41 mentions 'Trade and commerce with foreign countries; import and export across customs frontiers'. If these expressions are to be interpreted as including duties to be levied in respect of that trade and commerce, then entry 83 which is 'Duties of customs including export duties' would be wholly redundant. Entries 43 an....
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.... the observation extracted above that the Supreme Court has adverted to article 248(1) and (2) and also entry 97 in List I in support of the conclusion arrived at by them to show that the power to legislate is treated as distinct from a power to levy a tax. Therefore, in our view, the contention of Mr. Surianarayana Iyer, learned counsel for the Revenue, that the power to legislate given under the particular entry, viz., entry 18 of List II, will not also carry with or as incidental to it, a power to levy a tax unless a power to tax has been clearly conferred by any particular entry in one or other of the lists has to be accepted, as it is based on the scheme of our Constitution. We may also refer to the decision of the Andhra Pradesh High Court in Jupudi Sesharatnam v. Gift-tax Officer, Palacole [1960] 38 ITR 93. No doubt, it will be seen that in that case the counsel appearing for the various petitioners who were attacking the Gift-tax Act, were also relying upon certain other entries in List II in support of their contention that the State legislature alone had got power to levy tax on gifts and not the Parliament. It is not really necessary for us to consider that aspect, bec....
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....responds to entry 88 of the Constitution and entry 43 of List II of the Government of India Act corresponds to entry 47 of the Constitution. The Federal Court had to consider the ambit and scope of the expression "succession" and the learned Chief Justice, after a consideration of the various entries, no doubt, observes that their attention was drawn to the meaning of the word "succession" in dictionaries and law lexicons and a contention was raised that the word succession was capable of comprehending every kind of passing of property intended to be comprised in question No. 1 that was referred for consideration to the Federal Court. The learned Chief Justice observes: "We are by no means satisfied that this is so." Then considering the entries in the various lists of the Government of India Act as also entry No. 7 of List III of the Government of India Act dealing with "Wills, intestacy and succession" corresponding to entry No. 5 in List II of the Constitution where the same words occur, the learned Chief Justice observes: "The Succession Act broadly divides the subject of 'succession' into 'testamentary' and '....